On the wrong path

Australia risks losing thousands of higher value-added jobs unless the federal government acts to boost productivity with labour market flexibility, tax reform, infrastructure and fewer regulations, according to Business Council president
Graham Bradley
.

In a speech today Mr Bradley will call on the government to enter into a new compact with business to lift the lagging productivity growth rate.

He will warn against “a path of complacency" and over-reliance on the minerals boom that risks lower growth over the next 20 years.

“I share the sense of many Australians that this is the path we are now on. The commodities boom has made it possible to paper over weaknesses in our economic policy settings and to delay decisions that must ultimately be made," he will say.

Last week Prime Minister
Julia Gillard
called for “a more sophisticated conversation about productivity". She acknowledged at the jobs forum the key role of lifting productivity to plump future living standards and warned of the dangers of “passivity".

The Business Council’s policy agenda includes a 10-year overhaul of tax policies, reducing inefficient state taxes and cutting corporate and personal income tax rates to bolster competitiveness.

The agenda includes urging the adoption of fully national markets for transport, water and electricity to cut costs and increase infrastructure efficiency.

The business lobby group is also pushing a flexible industrial relations system to include statutory individual contracts. A further key item is aggressive deregulation and harmonising of federal and state regulations.

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Mr Bradley will say there is widespread agreement about the importance of lifting productivity but no agreement on how to do it.

Between 2003-04 to 2007-08, multifactor productivity fell to 1 per cent, Bureau of Statistics data shows. Multifactor productivity is the efficiency with which combined labour and capital inputs are transformed into outputs.